Federation of Small Businesses calls on government to strengthen its Prompt Payment Code as over half of small firms are paid late by large companies

Business leaders are calling on the government to do more to protect small firms from late payments by large companies.

The Federation of Small Businesses says half of all its members were paid after the agreed date by big firms and corporations in 2013.

The body says Westminster needs to strengthen its Prompt Payment Code to make it easier for firms to complain.

Money

It also says there must be a culture change among large companies which repeatedly pay late, with some small companies saying they have waited up to 120 days.

Small businesses make up more than 95% of Kent’s economy.

Just one in 10 FSB members polled had charged interest to clients for overdue payments because they feared losing business.

Research suggests that late payments restrict business growth by 29% and reduce profitability by 34%.

Roger House, chairman, Federation of Small Businesses Kent and Medway

The FSB’s Kent and Medway chairman Roger House said: “Small businesses simply can’t be expected to lend interest free to their large customers, which is in effect what extended payment terms and late payments results in.

“Government needs to get its policy on this right but as the biggest buyer in the UK, it should also walk the talk and pay its suppliers in a timely manner.

“We are committed to doing all we can to help businesses make the most of the upward move in the economy, and late payment is an issue the Government, local authorities and large businesses in Kent must tackle.”